Here we will now estimate a Spatial Durbin model (SDM), here we lean on the work of Ruttenauer, T. (2019) who through testing different spatial models found that in contrast to the SAR model, that SDM provides accurate estimates of direct impacts even in the case of misspecification, and for this reason we seek to evaluate its results of the effect of population changge on house prices. It is expressed in Ruttenauer, T. (2019) that SDM combines an autoregressive dependent variable and spatially lagged covariates (Wy and WX), the model used is displayed below:
Y=ρWy+Xβ+λWX+ε
We start out, as before by constructing a weight matrix, which will be created as a neighborhood object.
